on The Impact of Technology on the Retail

on The Impact of Technology on the Retail Environment

n n n n bringing market driven solutions to companies with significant property portfolios operational strategists at the cutting edge focus on infrastructure integration specialists in retail property and e-commerce value adding to property portfolios expertise with telco’s and financial institutions setting performance measurements and benchmarks for CRE and IRE , who are each examining new ways of doing business and setting up more flexible infrastructures

Outline n The Retail environment n US and Australian experience n Impact of technology and the Retail quandary n Convergence implications n Business models - from Place to Space n Impact on property and business management

What’s happening now in Australia n n n n Retailing accounts for > 30% of Aust. economy($120 b) 50% of Aust. families own computers and half on net Australians 5 th largest internet users in world 3. 5 m. users; predicted to double by 2002 Internet generated revenue $2. 1 b to grow to $16 b by 2002 63% of internet users are>30 year old bracket US market growing at an annualised rate of 190%; Australian market 18 months behind Recent ACRS report showed: n 42. 5% of retailers have an e-commerce strategy, with a focus on information and brand building; n specialty retailers’ internet sales to increase from 15. 8% this year to 61. 9% in 2002

Why the Net? . . . Information HI INTERNET (rich info at zero management cost) RICHNESS (amt. of info, degree of interaction) Hi sto ric tra de -of f LO Catalogues HI REACH (Customers contacted)

The retail quandary n how to open new distribution channels without losing old ones (replacing bricks and mortar with digital assets) n direct to consumers via web, or protect traditional channels n the new consumer mantra - my time, my place n successfully tying together digital and physical commerce is not easily replicable by online firms n managing the supply chain to meet increased demand n the delivery chain that runs forwards towards customers hardly changed at all in the past 100 years …until now n inadequacy of online ordering unless linked with real world fulfilment

Impact of technology - US trends n n n Online US chains (Wal-mart, GAP, Nordstrom) are considering a multi-channel approach that includes aggressive global expansion policies including major on-line strategies stores are creating effective feedback loops: n store - website - catalogue - store physical retailers are setting up effective feedback loops between stores and websites bricks and mortar sites become the best advertisements that online brands can buy big box retailers on the move: n n n Kmart with Yahoo Wal-Mart with AOL Microsoft and Best Buy

From Market Place to Market Space n n value creation has moved from Place to Space currently, retail chains have value creation distributed through both Place and Space: manufacturer n n wholesaler retailer consumer Place (mfg, packaging, distn, mktg) Space (e-payment, EDI from mfrs, info on purchasing patterns)

Impact on Property n substantial changes are taking place - most visible in finance and services - up to 50% space under stress which will progressively alter the ‘face of offer’ of shopping centres as consumers become ‘connected consumers’ n harness change by business mix planning, taking care not to take a historical ‘set’ on shopping centre design and mix n formulate strategies to mirror centre management approach to manage the new economy n policies to encourage non-commodity lifestyle retailers: n Borders coffee/bookshop n BMW café - Southbank

Impact on management n n n n n creating an e-commerce business culture ensuring staff own the project treating the website as a separate business reduction of inventory costs ensuring efficient physical distribution database management, application of direct marketing skills to capture knowledge simple, reliable technology branding to achieve consumer quality no duplication of high labour costs or physical facilities commitment to e-commerce by all stakeholders suppliers, manufacturers and retailers

Clicks and Bricks Pty Ltd -advisors to CRE and IRE managers n tailored property and technology solutions for CRE and IRE managers n property infrastructure planning (CIR) and associated systems integration n development of on-line/offline business strategies, with a focus on retail property n venture creation within new economy n business development

459 Collins Street, Melbourne VIC 3000 Ph: (03) 9613 9945 Fax: (03) 9532 8550 e-mail: honeyl@ozemail. com. au www. clicksandbricks. com. au Property Technology e-Business operational strategies